Correlation Between Perma Pipe and PGT Innovations

Can any of the company-specific risk be diversified away by investing in both Perma Pipe and PGT Innovations at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Perma Pipe and PGT Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perma Pipe International Holdings and PGT Innovations, you can compare the effects of market volatilities on Perma Pipe and PGT Innovations and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Perma Pipe with a short position of PGT Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma Pipe and PGT Innovations.

Diversification Opportunities for Perma Pipe and PGT Innovations

0.6

Correlation Coefficient

Perma Pipe  PGT Innovations

Poor diversification

The 3 months correlation between Perma and PGT is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Perma Pipe International Holdi and PGT Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGT Innovations and Perma Pipe is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Perma Pipe International Holdings are associated (or correlated) with PGT Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGT Innovations has no effect on the direction of Perma Pipe i.e., Perma Pipe and PGT Innovations go up and down completely randomly.

Pair Corralation between Perma Pipe and PGT Innovations

Given the investment horizon of 90 days Perma Pipe is expected to generate 1.91 times less return on investment than PGT Innovations. In addition to that, Perma Pipe is 1.52 times more volatile than PGT Innovations. It trades about 0.05 of its total potential returns per unit of risk. PGT Innovations is currently generating about 0.13 per unit of volatility. If you would invest  1,893  in PGT Innovations on September 2, 2024 and sell it today you would earn a total of  902.00  from holding PGT Innovations or generate 47.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	31.05%
Values	Daily Returns

Perma Pipe International Holdi  vs.  PGT Innovations

Perma Pipe Internati

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Pipe International Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Perma Pipe demonstrated solid returns over the last few months and may actually be approaching a breakup point.

PGT Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PGT Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PGT Innovations is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Perma Pipe and PGT Innovations

The main advantage of trading using opposite Perma Pipe and PGT Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma Pipe position performs unexpectedly, PGT Innovations can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PGT Innovations will offset losses from the drop in PGT Innovations' long position.

The idea behind Perma Pipe International Holdings and PGT Innovations pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.